Tech IPOs: Cream of the Crop - Barron's

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Tech's Newbies Find Eager Buyers by Tiernan Ray

Summary: Tech IPOs are hot, especially since private equity groups are spending huge amounts of cash in taking established companies private. Shares of the 20 venture-capital financed tech companies that IPOed last year were up on average 14.3%, handily beating the Nasdaq's 10%, and the S&P's 13.5% return. Christopher McHugh of the Turner Investment Partners' Midcap Growth Fund likes the "new internet construction firms," like data-storage vendor IPG Photonics Corp. (IPGP). CommVault Systems Inc. (CVLT) is up 36% since its IPO, and Acme Packet Inc. (APKT) is up 67% -- both pricey, yet 'worth a bet' by growth investors; CVLT trades at 44x 2006 earnings, and APKT trades at 55x. The latest dot-com darlings? No, says McHugh. These companies are actually profitable, and may provide handsome growth over the next 3-5 years. Acme makes routers to direct internet phone calls among networks; neither Cisco Systems Inc. (CSCO) nor Juniper Networks Inc. (JNPR) has a product that can do that. CVLT boasts innovative backup software that is eating up market share, making it a potential buyout target for EMC Corp. (EMC) or International Business Machines Corp. (IBM).
Related Links: A Strong Start for CommVault, Despite Distractions, Acme Packet and Akamai: SIPlified Content Distribution, Seeking Alpha's IPO Analysis